Measures of the Utility of Probabilistic Predictions in Cost-Loss Ratio Decision Situations in which Knowledge of the Cost-Loss Ratios is IncompleteSource: Journal of Applied Meteorology:;1969:;volume( 008 ):;issue: 006::page 863Author:Murphy, Allan H.
DOI: 10.1175/1520-0450(1969)008<0863:MOTUOP>2.0.CO;2Publisher: American Meteorological Society
Abstract: Comparative operational evaluation of probabilistic prediction procedures in cost-loss ratio decision situations in which the evaluator's knowledge of the cost-loss ratio is expressed in probabilistic terms is considered. First, the cost-loss ratio decision situation is described in a utility framework and, then, measures of the expected-utility of probabilistic predictions are formulated. Second, a class of expected-utility measures, the beta measures, in which the evaluator's knowledge of the cost-loss ratio is expressed in terms of a beta distribution, are described. Third, the beta measures are utilized to compare two prediction procedures on the basis of a small sample of predictions. The results indicate the importance, for comparative operational evaluation, of utilizing measures which provide a suitable description of the evaluator's knowledge. In particular, the use of the probability score, a measure equivalent to the uniform measure (which is a special beta measure), in decision situations in which the uniform distribution does not provide a suitable description of the evaluator's knowledge, may yield misleading results. Finally, the results are placed in proper perspective by describing several possible extensions to this study and by indicating the importance of undertaking such studies in actual operational situations.
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contributor author | Murphy, Allan H. | |
date accessioned | 2017-06-09T17:05:05Z | |
date available | 2017-06-09T17:05:05Z | |
date copyright | 1969/12/01 | |
date issued | 1969 | |
identifier issn | 0021-8952 | |
identifier other | ams-7913.pdf | |
identifier uri | http://onlinelibrary.yabesh.ir/handle/yetl/4221878 | |
description abstract | Comparative operational evaluation of probabilistic prediction procedures in cost-loss ratio decision situations in which the evaluator's knowledge of the cost-loss ratio is expressed in probabilistic terms is considered. First, the cost-loss ratio decision situation is described in a utility framework and, then, measures of the expected-utility of probabilistic predictions are formulated. Second, a class of expected-utility measures, the beta measures, in which the evaluator's knowledge of the cost-loss ratio is expressed in terms of a beta distribution, are described. Third, the beta measures are utilized to compare two prediction procedures on the basis of a small sample of predictions. The results indicate the importance, for comparative operational evaluation, of utilizing measures which provide a suitable description of the evaluator's knowledge. In particular, the use of the probability score, a measure equivalent to the uniform measure (which is a special beta measure), in decision situations in which the uniform distribution does not provide a suitable description of the evaluator's knowledge, may yield misleading results. Finally, the results are placed in proper perspective by describing several possible extensions to this study and by indicating the importance of undertaking such studies in actual operational situations. | |
publisher | American Meteorological Society | |
title | Measures of the Utility of Probabilistic Predictions in Cost-Loss Ratio Decision Situations in which Knowledge of the Cost-Loss Ratios is Incomplete | |
type | Journal Paper | |
journal volume | 8 | |
journal issue | 6 | |
journal title | Journal of Applied Meteorology | |
identifier doi | 10.1175/1520-0450(1969)008<0863:MOTUOP>2.0.CO;2 | |
journal fristpage | 863 | |
journal lastpage | 873 | |
tree | Journal of Applied Meteorology:;1969:;volume( 008 ):;issue: 006 | |
contenttype | Fulltext |